Vast Majority of Recruiting Firms Expect Increases in 2019

A brand new report by Bullhorn has found that 79 percent of recruiting firms expect to bring in more revenue this year than last. Optimism reigns across the sector despite growing concerns and emerging challenges related to automation, macroeconomics and politics. Let’s dig into the report findings.

February 8, 2019 – A new year, a new set of perspectives and priorities. In 2019, search consultants are feeling bullish and are eyeing increases in temporary placements, operating budgets, investments in technology, efforts to worker skills through education and training, and the percentage of business conducted via VMS.

Seventy-nine percent of recruiting firms said they anticipate an increase in 2019 revenue, according to Bullhorn’s “2019 Global Recruitment Insights and Data” report. Twenty-three percent said they expect revenue to rise more than 25 percent, and only 2.5 percent expect revenue to decrease. Asia-Pacific firms seemed to be the most optimistic about the industry for 2019. The metrics align with recent data collected by Hunt Scanlon Media spanning 15,000 recruiters across every continent. That market intelligence report is due in April.

In terms of placements for the year, 63 percent of recruitment professionals said they are expecting increases in temporary placements. Fifteen percent of search firms expect temporary placements to remain the same, while three percent of firms expect temporary placements to decrease.

Embracing Digital Transformation

The report also found that global search firms were anticipating increases in their operating budgets (57 percent of them do). Europe had the highest rate of projected increase in technology investment, while North America had the least. There is a strong positive correlation between firms that understand artificial intelligence and are expecting increases in technology investment, said Bullhorn.

“What Bullhorn’s research illustrates is that optimism abounds in the global recruitment industry,” said David Grundy, CEO at Invenias, a global provider of cloud-based software for executive search firms. Invenias was acquired by Bullhorn last year. “Agencies expect revenue, budgets, investments and placements all to be higher in 2019 than they were heading into 2018. To be successful in the years ahead, it’s clear that staffing agencies must continue to embrace digital transformation to drive business growth. By automating manual workflows, agencies can start to realize the value of artificial intelligence and predictive decision-making on their competitiveness.”

Expected increases in tech spending is strongly correlated with understanding AI.

The Bullhorn report also asked in relation to technology how firms felt about VMS, specifically conducting their business via VMS (vendor management system) this year. The final verdict on VMS remains foggy as 32 percent of global recruitment professionals said they expect their percentage of VMS business to increase, while 35 percent expect it to remain the same as last year.

Forty-seven percent of global firms said they will focus on workforce reskilling efforts, or updating workers’ skills through education and training. Asia-Pacific countries were the most polarized region on the topic, with the highest projected increase and the highest projected decrease.

Compared to 2018, how do you expect the workforce reskilling efforts (updating workers’ skills through education and training) to change in your business in 2019?

Workforce reskilling is also a highly relevant solution for candidates whose current skills-sets could be automated by artificial intelligence in the near future, according to the Bullhorn report. And therefore, it was especially interesting that a projected increase in workforce reskilling was highly correlated with an understanding of artificial intelligence, said the report.

Projected increases in workforce reskilling efforts are highly correlated with an understanding of artificial intelligence.

What Will Search Firms Prioritize in 2019?

In short, the report found that candidates will be a top priority this year. Sixty-one percent of firms listed candidate acquisition and sourcing, and 36 percent of firms ranked engaging candidates and improving the candidate experience as their two biggest priorities. “This makes sense considering that strategically identifying and sourcing candidates and providing incredible candidate experiences are two of the most effective ways to combat the talent shortage,” the report said.

Beyond candidates, here are some other notable priorities that firms will focus on in 2019. Bullhorn explores these priorities in more detail below.

Despite the promise of creating a renewable talent tool, reskilling ranked toward the bottom of the list as only five percent of global firms selected reskilling workers because of the changing nature of jobs as a top priority.

While VMS usage in the recruiting industry is increasing, it’s a priority for some firms and not necessarily a priority for others — based on whether VMS models are the right fit for firms and their business. That’s why only three percent of firms listed expansion of VMS business as a top priority for 2019.

Embracing Digital Transformation to Improve Operations

Automation and artificial intelligence continue to be one of the hottest trends and topics in the industry conversation. Last year, dialogues swirled about the potential impact of automation and artificial intelligence on recruiting — will the robots overtake human recruiters or will they aid their work?

“While we’re nowhere near a robot apocalypse that’s depicted in science fiction, bots are here to help improve firms’ operational efficiencies,” the Bullhorn report said. How so? “By automating lower-level initiatives such as scheduling, screening, following up, and data entry so human recruiters can focus on more strategic initiatives such as developing and deepening relationships — doing what humans do best,” it concluded.

Regionally, North American search firms ticked digital transformation as a priority more than European and Asia-Pacific recruitment agencies. The report also found that firms this year are likely to focus on incorporating digital transformation into their recruitment strategies to help them become even better and more efficient at their jobs. “Once automation and artificial intelligence are fully harnessed into the recruitment workflow, they’ll have profound implications on the industry at large,” the report said.

Employment Brand Development and Marketing

The Bullhorn report found that most recruitment firms lack proper marketing leadership, with only 30 percent of respondents identifying employment brand development and marketing as a top priority for 2019. According to a separate Bullhorn survey of more than 100 staffing leaders of medium to large-sized firms, 61 percent indicated that they have neither a vice president of marketing nor a chief marketing officer.

Related: Search Firms Adding Marketing Leaders to Guide Brands, Create Buzz

Executives (defined in this research as C-level executives, firm owners and primary owners of lines of businesses) and senior managers (defined as managers, directors and vice presidents) at recruitment firms were more focused on employment brand development and marketing than staff (defined as frontline recruiters and salespeople). Geographically, North American and European agencies were more concerned with this priority than Asia-Pacific firms.

Why aren’t there more senior marketing leaders, especially in an industry where nurturing candidate relationships is paramount? “While it can be expensive to invest in seasoned marketing leaders, the result is beneficial: a cohesive marketing strategy and vision that has business impact,” the report said.

 Improving Management of Client Relationships

In an industry driven by relationships, improving management of client relationships is currency. After all, Bullhorns said, deeper relationships can yield more opportunities and businesses can only further grow when their client relationships flourish.

Related: 6 Reasons Why Executive Search is Ready for Disruption

Tellingly, executives and senior managers were more concerned with improving the management of client relationships than staff, potentially indicating that frontline professionals already believe that their current relationships are strong.

Ensuring Survival in Executive Search

Remaining relevant in today’s highly competitive business climate is one of the executive search industry’s toughest challenges, according to Tim Sheffield, chairman of Sheffield Haworth, in a new report by Invenias, a global provider of cloud-based software for executive search firms.

“Clients are far more sophisticated in how they acquire senior talent than ever before,” said Mr. Sheffield. “Many have pretty impressive in-house talent acquisition teams, so our industry has to ensure it is adding value – or what is its purpose?”

Technology will be the key to ensuring that companies have the strongest possible client relationships. “To stay in front of the competition, firms must embrace recruitment software to gain deeper insights into their client relationships and uncover real-time information to drive new growth opportunities,” said the Bullhorn report

Social Recruiting

Recruiters in today’s digital age have numerous ways to reach candidates, especially via social media. Tech-savvy recruiters are increasingly turning to social media to gain intelligence about candidates and source their very own super-skilled job seekers.

“Social media is an effective channel for connecting and building relationships with candidates,” the Bullhorn report said. “Recruiters can analyze candidates’ career and education experiences via LinkedIn, view their topics of interest via Twitter, dig deeper into their personas via Facebook, and understand their cultural and lifestyle interests via Instagram.”

Related: Here’s How Recruiters are Evolving Alongside Social Media

What do firms think about social recruiting as a top priority for 2019? North American and European firms are more likely to engage in social recruiting this year than their colleagues in Asia-Pacific, said the report. And enterprise firms were about 50 percent less likely to list social recruiting as a top priority.

“Succeeding in social recruiting is all about having a strong web presence, which not only helps attract new candidates, but also helps secure new clients,” according to the Bullhorn report.

Expanding into New Markets

As executive search firms grow their businesses, they will no doubt establish operations in new markets and develop brand recognition in strategic geographies. Bullhorn asks: “In order to expand into new regions, should recruitment firms grow organically or inorganically? In other words, should they build their own operations or buy current businesses to enhance their portfolios?”

Related: Economic Climate Creating Challenges for Recruiters

In 2017, 69 percent of staffing professionals answered that question by saying they preferred to build their organizations organically, while 31 percent said they favored growing their businesses through mergers and acquisitions. Fast forward to 2019, and, according to Bullhorn, North American and European firms were more likely to focus on expanding into new markets than Asia-Pacific agencies.

Why are search firms focused on new market growth, and why are some of them expanding via M&A? Bullhorn said that strategic M&A deals by larger firms and the proliferation of staffing investment from private equity firms will continue at steady pace for two reasons: private equity sees the financial appeal of capitalizing on an industry with low barriers to entry and comparatively low capital expenditures, and debt is cheap.

Final Thoughts

“Following a successful 2018, the global recruitment industry continues to remain optimistic for 2019,” said Gordon Burnes, Bullhorn’s chief marketing officer. “While firms will face another year filled with an unpredictable macroeconomic and political environment, most are confident in their ability to navigate through these challenges as they continue their journey of digital transformation to drive business growth.”

Related: The Global Recruiting Sector is in Growth Mode, But Challenges Loom

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